Jim Simons, founder of Renaissance Technologies, is one of the world’s best fund managers. He produces such consistently high returns that have allowed him to charge the highest fees in the industry for his fund and, subsequently, become one of the world’s richest men. As such, Simons is also one of the fund managers that private investors follow most.
And it seems private investors are not the only ones. Joel Greenblatt, founder of Gotham Capital, also appears to be a fan; it’s either that or great minds really do think alike. Greenblatt’s Gotham Capital has over 20 positions in common with Simons. Of their top 7 common stocks, 5 of them have outperformed the market since the end of last quarter.
Company | Ticker | Renaissance Tech | Gotham Asset |
APOLLO GROUP INC | (APOL) | 82813 | 7017 |
CEPHALON INC | (CEPH) | 60863 | 6678 |
LORILLARD INC | (LO) | 311390 | 5672 |
APPLIED MATERIALS INC | (AMAT) | 56830 | 5019 |
APPLE INC | (AAPL) | 445837 | 2877 |
ANALOG DEVICES INC | (ADI) | 78683 | 2847 |
INTEL CORP | (INTC) | 280841 | 2411 |
RESEARCH IN MOTION LTD | (RIMM) | 71875 | 2389 |
PARKER HANNIFIN CORP | (PH) | 55401 | 2271 |
ALASKA AIRGROUP INC | (ALK) | 115649 | 1891 |
BED BATH & BEYOND INC | (BBBY) | 64100 | 1844 |
CENTURYLINK INC | (CTL) | 78977 | 1750 |
ALTERA CORP | (ALTR) | 220792 | 1653 |
MARATHON OIL CORP | (MRO) | 56460 | 1613 |
PHILIP MORRIS | (PM) | 242355 | 1578 |
NEWMONT MINING CORP | (NEM) | 112943 | 1434 |
LINEAR TECHNOLOGY CORP | (LLTC) | 64485 | 1378 |
MICROCHIP TECHNOLOGY INC | (MCHP) | 67912 | 1266 |
LILLY ELI & CO | (LLY) | 387873 | 1262 |
WYNN RESORTS LTD | (WYNN) | 56440 | 1181 |
MAGELLAN HEALTH SERVICES INC | (MGLN) | 58315 | 1040 |
VERIZON COMMUNICATIONS INC | (VZ) | 114148 | 1016 |
Simons and Greenblatt both hold significant positions in the ever popular Apple Inc. Apple is one of the most popular stocks amongst hedge funds (see the entire list here), and with good reason. Since the end of the second quarter, Apple has returned an impressive 12.5%, compared to a 12.1% loss in the S&P 500 for the same period.
However, technology was not entirely good to Simons and Greenblatt. While they still managed to outperform the market through their individual positions in Intel Corp, they still lost 10.25% so far this quarter. Luckily, expectations are that Intel will bounce back. Of the hedge funds we track, all 5 of those with the largest positions in the company increased their holdings last quarter (see the details here).
One of Simons and Greenblatt’s best performing common stocks so far this quarter is the Apollo Group Inc.; the stock gained 4.4% since the end of June. Apollo is Greenblatt’s 19th largest position. Lee Ainslie of Maverick Capital is also a fan.
The pair also had a modest positive return via their respective positions in Cephalon Inc. The pharmaceutical prep company gained 0.9% since the end of June. Cephalon had a lot of interest last quarter. Jacob Gottlieb of Visium Asset Management increased his position by 127% to bring it up to over $197 million. Frank Brosens of Taconic Capital took it even further when he increased his position in Cephalon last quarter by 176%, bringing his position to over $551 million.
Simons and Greenblatt also did well through their positions in the cigarette company Lorillard Inc., nearly breaking even on the stock since June (-0.07%) in spite of the volatile market. They also have positions in Philip Morris. This stock has also performed better than the market recently.
Of the top 7 stocks Simons and Greenblatt have in common, two lost approximately 17% since the end of June. Specifically, Applied Materials Inc. lost -16.95% while Analog Devices Inc. lost -17.33%. However, interest is strong in both stocks; fund managers mostly increased their positions in both these stocks last quarter.
Simons’ position in Analog Devices is valued at almost $80 million after he increased his position last quarter, while his position in Applied Materials is a new position and nearly as large -- he holds $56.8 million in the company. Greenblatt owns the 14th largest share in Applied Materials and the 17th largest in Analog Devices, of the hedge funds we track.
We like both fund managers and believe that investors may be able to beat the market over the long run by imitating their top stock picks.
Disclosure: I am long CTL, PM, SPY.
